In a state's Pick 3 lottery game, you pay $1.45 to select a sequence of three digits (from 0 to 9), such as 433. If you select the same sequence of three digits that are drawn, you win and collect $391.14. If you win, what is your net profit?

In a state's Pick 3 lottery game, you pay $1.45 to select a sequence of three digits (from 0 to 9), such as 433. If you select the same sequence of three digits that are drawn, you win and collect $391.14. If you win, what is your net profit?

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 21P: In a certain state lottery, a lottery ticket costs 2. In terms of the decision to purchase or not to...

See similar textbooks

Similar questions

As the winner of a lottery you are promised 15 payments of $0.98 million each year starting a year from now. If the discount rate is 0.095, what is the present value of your winnings? Instruction: Type ONLY your numerical answer in the unit of millions,
After hearing a knock at your front door, you are surprised to see the Prize Patrol from your state's online lottery agency. Upon opening your door, you learn you have won the lottery of $12.5 million. You discover that you have three options: (1) you can receive $1.25 million per year for the next 10 years, (2) you can have $10 million today, or (3) you can have $4 million today and receive $1 million for each of the next eight years. Your lawyer tells you that it is reasonable to expect to earn an annual return of 10 percent on investments. Required: 1. What is the present value of the above options? (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. 2. Which option do you prefer? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2 above options? What is the present Note: Enter your answers in whole dollar not in millions (i.e., 1,000,000 not 1.0), rounded to nearest whole dollar.…
In a certain state lottery, a lottery ticket costs 2. In terms of the decision to purchase or not to purchase a lottery ticket, suppose that the following payoff table applies: a. A realistic estimate of the chances of winning is 1 in 250,000. Use the expected value approach to recommend a decision. b. If a particular decision maker assigns an indifference probability of 0.000001 to the 0 payoff, would this individual purchase a lottery ticket? Use expected utility to justify your answer.
You have won the lottery, and you must choose between three award options. You can select one of the following options: To receive a lump sum today of $75 million, To receive 10 end-of-year payments of $12 million, to receive 30 end-of-year payments of $8 million. If you expect to earn 9% annually: What is the present value of alternative ii? What is the present value of alternative iii? Which one you must choose?
answer must be correct or i will give down vote Congratulations! You have just won the Super Lottery valued at 25 million dollars! Under lottery rules, you have been given the option of accepting a one- time lumpsum payment of $10.5 million today or equal annual payments for the next 40 years. Required: Calculate the annual payment that makes you indifferent to either option?
I solved the problem, but please put the information you provided in an excel spreadsheet to get the answers I have please and explain the steps/formula used. 1. John won a $45 million lottery today. The payout is the following: John gets $1.5 million today and $1.5 million each year for the next 29 years. How much money worth today for the lottery assuming John’s federal tax rate is 39.6%, state tax is 8.5% and his annual discount rate is 12%? Annual Discount Rate = 12% Annual Income = 1.5 million Annual Federal Tax = 39.6% * 1.5 million = 0.594 million Annual State Tax = 8.5% * 1.5 million = 0.1275 million Annual Net Income = 1.5 million - 0.594 million - 0.1275 million = 0.7785 million Calculate Total Present Value by using the PVOA Formula. Annuity Factor i = 12% ; time = 29 years ; Factor = 8.0218 PVOA = PMT x Annuity Factor = 0.7785 x 8.0218 = 6.244971 million Total PV = Initial Net Income + PVOA = 0.7785 million + 6.244971 million = 7.02 million
how did you get the $239.50?
Question: Congratulations! You have won a state lottery. The state lottery offers you the following (after- tax) payout options: 1. $14,000,000 after five years 2. $2,000,000 per year for five years 3. $13,000,000 after three years Present value of the payout, Option #1 is $ Round your answer to the nearest dollar.
I solved the problems, but please put the information you provided in an excel spreadsheet to get the answers I have please. 1. John won a $45 million lottery today. The payout is the following: John gets $1.5 million today and $1.5 million each year for the next 29 years. How much money worth today for the lottery assuming John’s federal tax rate is 39.6%, state tax is 8.5% and his annual discount rate is 12%? Annual Discount Rate = 12% Annual Income = 1.5 million Annual Federal Tax = 39.6% * 1.5 million = 0.594 million Annual State Tax = 8.5% * 1.5 million = 0.1275 million Annual Net Income = 1.5 million - 0.594 million - 0.1275 million = 0.7785 million Calculate Total Present Value by using the PVOA Formula. Annuity Factor i = 12% ; time = 29 years ; Factor = 8.0218 PVOA = PMT x Annuity Factor = 0.7785 x 8.0218 = 6.244971 million Total PV = Initial Net Income + PVOA = 0.7785 million + 6.244971 million = 7.02 million 2. You are offered the opportunity to put some money away for…
You have just received notification that you have won the $1.03 million first prize in Lamarche Lottery. However, the prize will be awarded on your 100th birthday (assuming you're around to collect), 80 years from now. What is the present value of your windfall if the appropriate discount rate is 8 % ? (Enter your answer in dollars, not millions of dollars. Do not round intermediate calculations and round your final answer to 2 decimal places. Omit $ sign in your response.) Present value $
Hha
You have just won the state lottery and have two choices for collecting your winnings. You can collect $105,000 today or receive $20,700 at the end of each year for the next seven years. A financial analyst has told you that you can earn 9 percent on your investments. Required: Calculate the present value of both the options (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Which alternative should you select?